Question

If the payment of employees' compensation for future absences is probable, the amount can be reasonably estimated, and the obligation relates to rights that accumulate, the compensation should be:

a. accrued if attributable to employee's service not already rendered

b. accrued if attributable to employee's services already rendered

c. accrued if attributable to employee's services whether already rendered or not

d. recognized when paid

Answer 1

Accrual of a liability for employees compensation for future absences is required if all of the below conditions are fulfilled .

Condition No:1. Obligation arises from employee services already performed.

Condition No:2. Obligation arises from rights that vest or accumulate.

Condition No:3. Payment is probable.

Condition No:4. Amount can be reasonably estimated.

lets start checking all the given options.

a. accrued if attributable to employee's service not already rendered

Incorrect: since the employee is falied to render the service.

b. accrued if attributable to employee's services already rendered

Correct: since he performed the service& he met the condition

c. accrued if attributable to employee's services whether already rendered or not

Incorrect: until & unless redering service, he is not eligble to accure compensation.

d. recognized when paid

Incorrect: its not falling under eligble conditions..

So comparing with all the option, the correct answer is option:B (i.e; accrued if attributable to employee's services already rendered. )